New ETF is designed to provide investors with capital-efficient duration exposure while simultaneously seeking to amplify yield curve efficiencies in the middle of the curve
Simplify Asset Management (“Simplify”), an innovative provider of options-based Exchange Traded Funds (“ETFs”), today announced the launch of its newest ETF: the Simplify Risk Parity Treasury ETF (TYA).
TYA is designed to provide significant duration via modest capital allocation, while simultaneously seeking to harvest yield curve benefits from the middle of the curve. It does so by investing in a combination of US Treasuries and US Treasury futures from the middle of the curve, and targets fund-level duration equal to that of the ICE 20+ Year US Treasury Index.
“In the current low yield environment, it is more important than ever to be mindful of how you invest in duration. Capital efficiency and yield curve efficiency are key to a successful Treasury investment strategy,” said David Berns, Ph.D., CIO and Co-Founder with Simplify. “Unfortunately, all too often efficient Treasury investing requires leverage, which can be a significant operational and compliance hurdle for most investors and advisors. That’s an issue we’ve designed TYA to solve, and we’re very excited to be bringing this new fund to market.”
TYA can help solve for a number of portfolio needs. For some investors, the fund can be used as a core long duration asset with the potential for excess carry relative to cash investments in long-term Treasuries. The fund can also be used as a capital-efficient replacement for intermediate duration assets, as investors only need a fraction of the capital required by an unlevered position. Additionally, with its dual goals of capital and yield curve efficiency, TYA can be a key building block in more innovative portfolio systems such as risk parity.
TYA joins a Simplify ETF family that in just over one year, has already grown to $711 million AUM as of September 9th 2021, as advisors, family offices, institutions and the retail investor community have been drawn to the more scientific approach the firm has pioneered in combining equity index exposures with robust options overlays. More recently, the firm has also introduced a number of innovative ETF solutions designed around interest rate hedging (PFIX), volatility income (SVOL) and equity plus bitcoin exposure, via GBTC (SPBC).
ABOUT SIMPLIFY ASSET MANAGEMENT INC
Simplify Asset Management Inc. is a Registered Investment Adviser founded in 2020 to help advisors tackle the most pressing portfolio challenges with an innovative set of options-based strategies. By accounting for real-world investor needs and market behavior, along with the non-linear power of options, our strategies allow for the tailored portfolio outcomes for which clients are looking. For more information, visit www.simplify.us.
Investors should carefully consider the investment objectives, risks, charges and expenses of Exchange Traded Funds (ETFs) before investing. To obtain an ETF's prospectus containing this and other important information, please call (855) 772-8488, or visit SimplifyETFs.com. Please read the prospectus carefully before you invest. An investment in the fund involves risk, including possible loss of principal. Past performance does not guarantee future results.
An investment in the fund involves risk including the possible loss of principal.
The Simplify Risk Parity Treasury ETF (the “Fund”) seeks to provide total return, before fees and expenses, that matches or outperforms the performance of the ICE US Treasury 20+ Year Index on a calendar quarter basis. The Fund does not seek to achieve its stated investment objective over a period of time different than a full calendar quarter. The fund is new and has a limited operating history to evaluate.
When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the Fund.
The Fund invests in ETFs (Exchange-Traded Funds) and is therefore subject to the same risks as the underlying securities in which the ETF invests as well as entails higher expenses than if invested into the underlying ETF directly.
Derivatives Risk: Options are a derivative investment. The use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments.
Short-term investment Risk: Investors holding shares of the Fund over longer-term periods may be subject to increased risk of loss. The Fund is intended to be used only for short-term investment horizons. An investor in the Fund can lose all or a substantial portion of his or her investment within a single day. The longer an investor’s holding period in the Fund, the greater the potential for loss.
Futures Contract Risk: Futures contracts involve the following risks (a) the imperfect correlation between the change in market value of the instruments held by the Fund and the price of the forward or futures contract; (b) possible lack of a liquid secondary market; (c) leverage, which means a small percentage of assets in futures can have a disproportionately large impact on the Fund and the Fund can lose more than the principal amount invested; (d) losses are potentially unlimited; and (e) the possibility that the counterparty will default in the performance of its obligations.
Duration: A measure of the sensitivity of the price of a bond to a change in interest rates.
ICE 20+ Year US Treasury Index: Common industry benchmark that measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with 20+ years to maturity.
Simplify ETFs are distributed by Foreside Financial Services, LLC.